Business Rate Supplements Bill


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Clause 17

Regulations to deal with joint ownership, joint occupation or death
Question proposed, That the clause stand part of the Bill.
John Healey: This is a fairly straightforward clause. It enables us as a Government to set some practical arrangements on how levying authorities should deal with a business rate supplement in relation to properties jointly owned or occupied. It also allows them to make arrangements in cases where the person who is liable for the business rate supplement has died. The provisions will be technical in nature; they will mirror powers that already exist in relation to non-domestic rates; they are designed to ensure that it is clear where the liability for BRS falls in very specific circumstances. I think it therefore appropriate to deal with this in secondary legislation. The clause gives us the power to make those regulations, and I can reassure the Committee that no provisions made under them will affect the level of the liability due in respect of a property.
Question put and agreed to.
Clause 17 accordingly ordered to stand part of the Bill.

Clause 18

Notice to billing authorities before start of financial year
Dan Rogerson: I beg to move amendment 18, in clause 18, page 12, line 41, leave out ‘March’ and insert ‘January’.
The amendment seeks to examine the question of when the billing authority gets formal notice of the intention to charge a levy. My understanding of the Bill is that the levying authority has until the end of February in the calendar year in which the BRS will come into force, which is in the April. That is a concern because when people are given late deadlines, things can creep towards it; my thought is to bring that deadline back to the start of the calendar year so that the billing authorities have more notice. I say that because, for example, where a ballot is to be held, and it is not clear whether the BRS will go ahead, it may take the billing authority a considerable amount of work to put things in place in order to enact it. It is a straightforward amendment that allows the billing authorities a little more leeway in getting prepared for things to run smoothly when the BRS comes in at the beginning of the financial year.
Robert Neill: I apologise for not having welcomed you to the Chair earlier, Mrs. Dean, on behalf of myself and my hon. Friends. We are delighted to see you, as are all the other members of the Committee.
I have much sympathy with the amendment. It may be that March is used because it is a standard date in local government legislation. I served on a London borough council, which is a billing authority, for a number of years and talked to many others who are on billing authorities. I remember, therefore, the frustrations one often had when there was a precepting authority that went right up to the deadline in fixing its precept. That caused difficulty for the second-tier authorities in working out their budgets. The circumstance here is similar; putting back the deadline would make it easier for people to plan and get things in order.
The Parliamentary Under-Secretary of State for Communities and Local Government (Mr. Sadiq Khan): I, too, welcome you to the Chair, Mrs. Dean. It is a pleasure to serve under your chairmanship.
I thank the hon. Member for North Cornwall for explaining the reasons for tabling the amendment, and I acknowledge the points made by the hon. Member for Bromley and Chislehurst.
Amendment 18 would mean that levying authorities in two-tier authorities, and the Greater London authority, would have to serve notice on the billing authorities in their area, regarding the arrangements that are to apply for their BRS for the forthcoming financial year, before 1 January. In practice, we would expect levying authorities to give notice earlier than this to ensure that a BRS goes out with the rates bill.
A date of before 1 January would be three months earlier than the date in the Bill of 1 March. That March deadline was chosen for consistency with the timetable for upper-tier authorities in the GLA to issue council tax precepts for the forthcoming year, and with the budget setting process. We are trying, therefore, to ensure that the arrangements for BRS dovetail as far as possible with the existing administrative arrangements, hence minimising the burden on both the levying and billing authorities.
If agreed to, the amendment would cause inconsistency because the BRS and budget-setting/precept processes would be running to different timetables. Also, levying authorities—including the GLA—that intend to levy a BRS from 1 April 2010 could face difficulties in the short to medium term in meeting the timetable proposed by the amendment. The timetable is particularly tight considering that, before the levying authority can notify the billing authority, it will need to have prepared a prospectus, completed the mandatory consultation and revised the proposals in response to the consultation. I therefore respectfully ask the hon. Member for North Cornwall to withdraw his amendment.
9.45 am
Dan Rogerson: I was interested to hear what the Under-Secretary said about what would be expected of levying authorities. However, the concern is that what is expected and what is delivered may be two different things. The real reason lies in what he said about Crossrail in his closing remarks. Once again we have hit on an issue where the Bill has been drafted to meet the Crossrail timetable but will have effects elsewhere across the country, which is a grave concern.
The hon. Member for Bromley and Chislehurst referred to issues with precepting authorities. In my constituency there is a five-member parish council where there was a dispute between two members and the other three. The three resigned, making the parish council inquorate and no other people could be found to serve with the two who remained. There was a problem in setting a precept for that year, and this was quite a controversial time in the parish. In the end, we managed by public meeting to find some people willing to stand and resolved the situation. I make that as an aside about the frustrations that billing authorities can experience when dealing with other authorities.
I have not heard a persuasive argument from the Under-Secretary as to why we could not push the deadline back a bit further; we are talking about potential applications of this Bill much wider than Crossrail. I am concerned that, for example, where a ballot is to be held, if the deadline for having all the regulations in place is the beginning of March, that could allow extra leeway for the ballot to take place later. If a deadline is pushed later there is sometimes less impetus—less momentum to get things tied up and dealt with earlier.
I am not going to press this amendment to the vote because I think we have made the point, but I hope that the Government will clearly signal their intention in any reflections and advice they offer to local authorities as to how a prospectus should be put together. Every effort must be made to give as early an indication as possible to the billing authority as to what is proposed and what is likely to occur, so that we do not get the situation where a billing authority has to struggle to deliver things on time for the BRS to be imposed in the financial year.
Amendment, by leave, withdrawn.
Question proposed, That the clause stand part of the Bill.
Mr. Khan: As we have discussed, in two-tier areas the lower-tier authorities will act as the billing authority for the purposes of BRS. Clause 18 sets out the requirements on levying authorities in terms of notifying the lower-tier authorities in their area of their intention to levy a BRS, so that billing arrangements can be made in good time—and I hear the points made by the hon. Member for North Cornwall.
The key provisions in this clause are: subsection (1) requires levying authorities intending to impose a supplement to give written notice to each billing authority in their area; subsection (2) sets out the information that must be contained in the notice; subsection (3) specifies when the notice must be given and subsection (4) explains the scope and content of notices where the levying authority intends to impose more than one supplement in the year.
Question put and agreed to.
Clause 18 accordingly ordered to stand part of the Bill.

Clause 19

Notice to billing authorities during financial year
Question proposed, That the clause stand part of the Bill.
Mr. Khan: Clause 19 sets out the arrangements that apply where a supplement is not to be levied and collected as part of the annual non-domestic rating cycle and where a supplement is varied in accordance with clause 10, with the result that new bills have to be issued during the financial year. The clause requires levying authorities to give notice to each billing authority in their area of their BRS arrangements or the variation to their arrangements. This notice must be in writing and, if it is the first notice for the year, must contain the same information as a notice under clause 18, which we have discussed, would. If the notice is being issued as a result of a variation in an existing BRS, the levying authority must also set out the variation and the day on which the variation is to take effect.
The key distinction between notices under clause 18 and clause 19 is that notices under clause 19 will result in billing authorities incurring extra costs because of billing outside the usual cycle. Accordingly, clause 22, which we will come to, provides that levying authorities must meet costs incurred by billing authorities in dealing with notices under clause 19.
Robert Neill: I understand what the Under-Secretary is saying and I am grateful for the explanation. Perhaps, he can also undertake that the guidance on these issues will take on board the point, raised by the hon. Member for North Cornwall, about timely notice for such notices, as well as for others.
Mr. Khan: I can give the hon. Gentleman that reassurance. The points have been made very well—loud and clear.
Question put and agreed to.
Clause 19 accordingly ordered to stand part of the Bill.

Clause 20

Calculations for financial year
Question proposed, That the clause stand part of the Bill.
Mr. Khan: The clause sets out which authority is responsible for calculating the amount to be paid by each person liable to pay the supplement. Subsection (1) requires billing authorities that are also levying authorities to calculate the chargeable amount. Subsection (2) applies the section to lower-tier billing authorities that have been given notice by a levying authority under clause 18 or 19. Subsection (3) requires lower-tier billing authorities to calculate the chargeable amount payable by each liable person where they have been given notice by a levying authority under clause 18 or 19. Subsection (4) disapplies the requirement under subsection (3) on billing authorities to calculate the chargeable amount in the case of a variation of a supplement, unless the variation requires new calculations to be made. Subsection (5) explains how calculations under this clause are to be made.
In developing these proposals, the Government have ensured that the arrangements are as consistent as possible with the current procedures for business rates. That will minimise any additional burden on local authorities.
Question put and agreed to.
Clause 20 accordingly ordered to stand part of the Bill.

Clause 21

Collection and enforcement
Question proposed, That the clause stand part of the Bill.
Mr. Khan: The clause makes provisions for regulations to be made setting out the collection and enforcement arrangements for BRS. My right hon. Friend the Minister for Local Government has set out how the Government intend to make use of these provisions in the statement of intent. Subsection (1) enables regulations to be made for the collection and enforcement of supplements. Subsection (2) provides for the preparation of stand-alone regulations relating specifically to the collection and enforcement of supplements, and also for the existing regulations governing the collection and enforcement of non-domestic rates to be amended so that they apply to supplements. Subsection (4) confers a power to make regulations to address the collection and enforcement of supplements where projects are abandoned. Subsection (3) is not a regulation-making power; it gives the billing authorities a power to collect and enforce payment of supplements once they have come to an end. That is required to ensure that billing authorities can collect the supplement from those ratepayers who have outstanding liability.
Question put and agreed to.
Clause 21 accordingly ordered to stand part of the Bill.

Clause 22

Administrative expenses
Question proposed, That the clause stand part of the Bill.
Mr. Khan: I would like take this opportunity to explain the clause. It allows the Secretary of State and Welsh Ministers to make regulations that make provision for billing authorities to retain a proportion of the BRS revenue they collect to meet the expenses they incur in collection or recovery—referred to in the Bill as “administrative expenses”.
Where BRS is collected as part of the annual billing round, the costs will be met from the BRS revenue. Where billing authorities decide to levy the supplement outside the normal non-domestic collection round, the costs of collection will not come from the BRS revenue and will instead be met by the levying authority. Options for how administrative expenses should be calculated will be set out in the consultation paper that we propose to issue shortly on our proposals for secondary legislation.
Mr. Brian Binley (Northampton, South) (Con): It is a pleasure to serve under your chairmanship, Mrs Dean. I have some concerns about the clause. I preface my remarks by saying that I am very worried about giving opportunity to any Government body to grab more money than they need to have for a given project. I have already mentioned that parking charges are now being used to supplement local government revenue incomes, rather than to provide a service to local communities. I am concerned that the same sort of thinking, in the less scrupulous of our councils, might take place in this respect, too.
I have two concerns on which I seek clarification, the first of which is about the difference in billing. Subsection (1) makes it clear that the billing authority has the ability to recover moneys for administrative costs from the moneys collected through the BRS project. However, the clause then states that the authority can do that only if the information is given prior to the beginning of the financial year, and it seems from the impact assessment that when billing is undertaken as a separate exercise, the cost of collection will be met from the upper-tier authority’s own resources. So, if there is good notice for collection to be made as part of the normal collection of rates, it is the billing authority’s right to take those costs out before it hands the money back to the levying authority. If, however, the levying authority does not ask for a rate until after the beginning of the financial year, it seems that that cost falls on the upper-tier authority’s own revenue budget. Therein lie the sort of caveats that concern me—such as the ability to raise money that is not properly controlled and not transparently projected, but which adds to local authorities’ income streams.
First, will the Minister clear up the issue of those two ways of charging for the collection process? Secondly, how will we be assured, bearing it in mind that money might be coming from the general revenue budget of a given levying authority, that that money will be properly and transparently accounted for, so that people can have faith that money is not being leaked out into other budget areas for purposes not directly ascribed by the Bill?
 
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